Oracle’s AI spending exceeds estimates, raising growing debt concerns
Oracle has forecast up to $95 billion in capital spending for fiscal 2027 as it accelerates investment in artificial intelligence infrastructure and cloud computing. The company also plans to raise nearly $40 billion through debt and equity financing, prompting investor concerns about its growing debt load. Shares fell in extended trading despite stronger-than-expected quarterly results. Oracle said its Stargate data centre project with OpenAI is progressing rapidly and will be more than 75% complete within 90 days as the company continues expanding capacity to meet rising demand for AI computing services.
Oracle estimated spending on AI infrastructure would rise much more steeply in fiscal 2027, and revealed it may boost nearly $40 billion of debt and equity financing, raising concerns about its growing leverage. Oracle's quarterly numbers beat analyst expectations and shares slid 8.9% in extended trading following the announcement.
Oracle Lifts AI Infrastructure Spending
Oracle also communicated its projected fiscal 2027 capital expenditure could be as high as $95 billion, significantly above the estimate of analysts at $67.66 billion.
CFO Hilary Maxson said the company anticipates its direct spending will be about $70 billion directly, along with another $20 billion to $25 billion it expects customers would pay off. It was an additional payment made as Oracle's expenditure has reached $55.
Stargate Project and OpenAI Expansion
One other significant detail the company shared is its massive Stargate data centre project, being built with OpenAI and others in Texas, which is expected to be more than 75% complete within 90 days.
OpenAI customers will also be able to use advanced coding models on Oracle cloud platform, Josh Jacob said. Coming in at one-gigawatt, the company is on track to deliver almost as much capacity in Q1, 2027 (i.e., nearly matching what it delivered in total for the previous four quarters) according to executive Clay Magouyrk.
Fundamentally Solid Results Masked by Fundraising Issues
Also, Oracle said revenue for the fourth quarter was $19.18 billion, beating analyst expectations of $19.10 billion and adjusted earnings per share was $2.03 as expected.
Remaining performance obligations were $638 billion, compared with the expectation of $592.52 billion Analysts, however, said investor concern centered more on how Oracle plans to finance its rapidly expanding AI infrastructure as capital spending keeps rising.
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